Barry Gardiner: It was 1 December 1998. I had been an MP for one year and seven months to the day, and I was chained to the railings of College Green by 200 cheering leaseholders. Thankfully, they were friendly. It was to illustrate that leaseholders felt that they are were prison. Those were the days before social media, and it was a photo op. The BBC ran the headline, “Leaseholders demand more control”. They still do.
Since then, we have had the Commonhold and Leasehold Reform Act 2022, which was an attempt to resolve some of the problems, such as forfeiture of a person’s home for a failure to pay a small service charge, the ground rent grazers charging money for no service and moneys not being held in trust in sinking funds. It is strange that after 25 years, these should be the very areas that yet another Bill on leasehold reform is pretending and failing to solve.
I say “failing”, because that is the reason I rise to support new clause 5, tabled by my hon. Friend the Member for Greenwich and Woolwich (Matthew Pennycook). It is ridiculous that a landlord can take away a person’s home worth hundreds of thousands of pounds for a simple failure to pay a minor service charge amounting to a couple of hundred pounds and where there is a dispute over whether the service was even provided. That is why I tabled new clause 16 about moneys being held in trust, which would implement a provision of the 2002 Act that has never been brought into force. We heard in Committee that the policy had strong support from stakeholders, including spokespeople for the Property Institute and the Leasehold Advisory Service. Even the British Property Federation has campaigned for this provision of the 2002 Act to come into force, yet it is not here in the Bill. Of course, 2002 was a time when nobody had even predicted the new rentier practices that freeholders and developers have since invented to extract money from homeowners for the privilege of living in their own homes: the scandals of leasehold houses; the repeated doublings of ground rents; and the inclusion of commercial areas and shared services in any development to stop any hope of residents exercising their right to manage.
New clause 17 would ensure that leaseholders in mixed-use buildings could take advantage of the Government’s policies to lift the 25% non-residential premises cap to  50%, and to have mandatory leasebacks on expensive commercial premises. Unless that new clause—or a version of it—is adopted, few leaseholders in mixed-use buildings will be able collectively to enfranchise under the Bill, which would be a travesty. If the Government do not decisively address the structural dependency rules not only for enfranchisement but for right to manage, property developers will simply sidestep the new 50% non-residential premises limit by designing mixed-use blocks with shared services, connecting flats to commercial premises by an umbilical cord to deny leaseholders their rights. Indeed, articles from leading law firms explain how developers can build sites to ensure that blocks can never be eligible for collective enfranchisement and right to manage.
New clause 18 would provide the appropriate tribunal with the discretion to dispense with certain procedural requirements where it is satisfied that is reasonable to do. It is designed to deal with cases where a landlord attempts to frustrate a right to manage claim by procedural means. I am grateful to Mark Loveday of Tanfield Chambers —perhaps the leading authority on service charges and right to manage practice in Britain—for his help in drafting the new clause.
By Mr Loveday’s count, of the Law Commission’s 101 recommendations on right to manage, fewer than five have been specifically adopted by the Government in the Bill. A whole industry has emerged since Labour introduced the 2002 Act, which brought right to manage into existence, whereby freeholders seek to find minor technical errors by leaseholders to scupper genuine—and otherwise valid—right to manage claims. Since right to manage is a no-fault regime, Parliament never intended for it to be an invitation to litigation by deep-pocketed freeholders and their army of lawyers. As Mr Loveday notes, the 2002 Act’s right to manage does have “traps for the unwary”, and
“the single most important problem with the right to manage, namely its procedural complexity”,
with
“these problems…famous among property lawyers”,
having
“notoriously led to litigation on a truly industrial scale.”
I urge the Minister to look again at new clause 18 in the other place and adopt such a pragmatic amendment, which would enable a tribunal to waive minor procedural mistakes by leaseholders where it deems that just and convenient.
Since 2002, we have also had the Grenfell Tower tragedy, which has exposed the rotten culture of residential construction in this country. Members should wonder why it is that over 11,000 tower blocks are reckoned to have fire safety defects, no fire-stopping in building voids, a lack of compartmentation, combustible cladding and inadequate fire doors that leave the residents at the mercy of landlords, who literally go to the other side of the world to avoid having to pay for remediation.
Residents are subject to unfair service charges and find themselves prisoners trapped in their own homes, unable to sell up and move on with their lives. This unjust system leeches off ordinary people and shames us. This is the only remaining country in the world where residential leasehold is the default tenure for apartment living. A person’s home should not be a source of misery to them and one of unjust enrichment to others.
We are talking about the lives of 5 million people who need to be freed from their feudal burden. That brings me to new clause 19, which seeks to restore the intent of the section 20 major works regime in the 2002 Act to what it was prior to the Daejan ruling. The Minister was good enough in Committee to confess that he was unaware of the ruling and said that he would study it with his officials. Yesterday, I received a letter from him on some of the points I raised in Committee. He admitted that since Daejan,
“the vast majority of applications for dispensation are brought by the landlord.”
However, he went on to say:
“regardless of which party makes the application, the landlord will have to persuade the tribunal that dispensation should be granted, and it will be for the leaseholders to evidence that they have suffered prejudice”.
He said:
“I recognise your concerns that leaseholders have to evidence prejudice, but only they are able to do so. Once that threshold has been met, the burden is on the landlord to rebut the impact the prejudice has had on the leaseholders.”
He concluded:
“the consequence is that an application to the tribunal is not merely rubber stamping the landlord’s request.”
I fundamentally disagree.
Sue Bright, professor of land law at Oxford University, has been conducting research into this area, and argues as follows:
“The importance attached to the consultation requirements is evidenced by the fact that if the landlord fails to conduct the statutory consultation it is prevented (in the current form of the consultation provisions) from recovering more than £250 from an individual tenant in relation to those works. Seemingly, this provides a very strong incentive to comply with the requirements but the protection offered was seriously weakened by the Supreme Court decision in Daejan Investment Properties Ltd v Benson. Lord Neuberger said that the consultation requirements are a means to an end rather than an end in themselves. He sees the provisions as playing a supporting role in achieving (only) the end goal of consumer protection secured by section 19 of the Landlord and Tenant Act 1985, that is, protecting tenants from unreasonable service charges. An alternative vision, supported by the dissenting judgment of Lord Wilson, acknowledges that consultation is an important end in itself. This recognises that consultation has an inherent value. Further it is in keeping both with the tenor of the new building safety regime that promotes fuller engagement with leaseholders and residents, and the thrust of contemporary government policy towards providing consumer protection to leaseholders.”
Her findings are grim for supporters of leaseholders and a sense of fair play. She says:
“In all of the fire safety cases reviewed for this article dispensation was granted, at least in part, and, with a few exceptions, the overwhelming majority were granted unconditionally even when the FTT”—
the first-tier tribunal—
“was critical of the way in which the applicant had managed things.”
I also thank Dr Howard Soper, another academic who helped draft the amendment, who was appalled by the number of successful dispensations won by freeholders that he found in his study of first-tier tribunal decisions.
I urge the Minister to think again, because this cuts to one of the most fundamental injustices that we have seen in leasehold apartments in recent years—those individuals trapped in buildings with fire safety defects.  This Bill is the first set of reforms to the leasehold tenure in 22 years. The test that I set the then Labour Administration was a simple one. I said:
“What we want is for leaseholders to be able to take control over their own lives without landlords being able to say when you have a new roof, how much you pay for it, who does it, when it’s going to happen. You should be able to decide that for yourself in your own home.”
The proposals in front of us today do not liberate leaseholders. The Secretary of State himself has said:
“I don’t believe leasehold is fair in any way. It is an outdated feudal system that needs to go. And we need to move to a better system and to liberate people from it.”
He was right. This Bill does not do that. It will be left to a future Labour Government.